Industry funds dominate SuperRatings performance rankings

SuperRatings’ latest analysis of Australia’s best-performing superannuation funds show that industry funds have recorded the strongest returns over the last ten years, as the superannuation industry as a whole shows strong recovery in the decade following the global financial crisis (GFC).

The SuperRatings data shows that industry funds fill out the list of the top performing funds, with many recording returns well above SuperRatings’ SR50 Balanced industry benchmark of 4.7 per cent per annum.

REST – Core Strategy was SuperRatings’ highest performing fund over the last ten years, returning average annual returns of 6.1 per cent. It was followed by CareSuper – Balanced with 6.0 per cent, HOSTPLUS – Balanced and Equip MyFuture – Balanced Growth, both with 5.7 per cent.

Industry Super Australia chief executive, David Whiteley, said that the results were a testament to industry funds’ equal representation governance model, which emphasises governance by employee and employer representatives. The model is currently under threat from the Parliament’s superannuation reforms that are before the Senate.

It is worth noting, however, that the SuperRatings’ data only measures long-term performance. Looking at more recent returns, Chant West found that retail funds outperformed industry funds last month, albeit not over the long-term.

The SuperRatings’ analysis showed overall growth across the superannuation sector over the last decade, as the industry enjoyed a windfall recovery following the challenges of the GFC. The median balanced fund has returned an accumulated 155 per cent since October 2007.

SuperRatings chief executive officer, Kirby Rappell, said that this is a relief for the Australian superannuation industry, which was hit hard by the GFC because of its significant exposure to domestic and global shares.

“Since 2009, we have enjoyed one of the longest bull markets in history. This has more than erased the pain of the GFC, and has put retirees in a better position than they might have expected,” she said.

The good news for super funds is set to continue, with SuperRatings predicting that the Australian share market will end 2017 on a high.

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The mix of employer and employee directors seems to work for the industry super funds. I observed at the recent CBA AGM that there was much unhappiness with large and small shareholders over the performance of a number of non-executive directors on the CBA board.

REST's Core Strategy has a current asset allocation of 76% Growth / 24% Conservative with the flexibility to increase the Growth portion right up to 85%....it's not a Balanced option it's a Growth option and shouldn't be compared against other true Balanced options.

Hostplus' Balanced option is currently 90%/10% that's if you don't allow them to include property and infrastructure as Conservative.

CareSuper's Balanced option is currently 89%/11%.

It's a joke, all of the industry fund default options are really either Growth or High Growth.

At some point some of these ratings companies might be able to get their parameters right so their awards actually mean something.